Senior execs unhappy with performance pay

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The Office of Personnel Management’s plan to implement a pay-for-performance system for senior executives is not going smoothly, and members of a Senate panel want to know why.

The system, which is entering its third year, is intended to reward Senior Executive Service members with larger pay increases and bonuses for better performance. The goal is to create incentives for executives to excel in their jobs. But OPM has granted only one agency, the Labor Department, full certification of its performance management system. Twenty-five agencies have provisional certification.

“Career members of the SES are talented individuals,” said Sen. George Voinovich (R-Ohio), chairman of the Homeland Security and Government Affairs Committee’s Government Oversight Subcommittee, at a recent hearing. “They’re really important people.”

Voinovich and Sen. Daniel Akaka (D-Hawaii), the subcommittee’s ranking member, were interested in two new reports from the Senior Executive Association and the Government Accountability Office. The SEA report suggests that many executives are feeling demoralized rather than motivated by the new system. Many executives believe their agencies are using quotas that block high-performing leaders from the highest rankings, according to the report.

Another complaint is that because agencies using the new systems have greater flexibility in awarding pay increases, some high-scoring executives get no reward.

Carol Bonosaro, president of the SEA, said the survey her group conducted shows that 15 percent of respondents who got the highest possible ratings at their agencies in 2005 didn’t receive a salary increase in 2006.

“All pay adjustments are permissible. None are required” under a pay-for-performance system, she said.

The SEA submitted a proposed bill that would close the loopholes the survey revealed, Bonosaro said. Its provisions include mandatory pay raises for SES members so they at least keep pace with the rest of the civil service.

Dissatisfaction with the ongoing changes to the pay structure is causing many in the SES to accelerate their retirement plans, Bonosaro said, citing the survey’s findings. About 90 percent of the federal employees in those positions will be eligible for retirement within a decade, she said.

A GAO report generally approved of OPM’s efforts, but GAO auditors found some weaknesses. One key problem is a lack of clear guidance and communication between OPM and other agencies on what the agencies need to show for OPM to certify their performance management systems. OPM has not given agencies concrete requirements, leaving them guessing in some cases about what they need to demonstrate. OPM officials told GAO that the ambiguity was intentional to give the agencies flexibility.

Brenda Farrell, GAO’s acting director for strategic issues, said OPM should improve the certification process so that agencies understand what is expected and so that provisional certifications do not become the norm.

OPM Director Linda Springer told the subcommittee that the agency is making good progress.
“Transformations of this type take time, and agencies are continuing to perfect the required elements of performance plans and measurement,” she said.

Springer said OPM does not allow agencies to use quotas. However, she recognized that agencies might not implement the systems consistently. “We believe it is an execution issue, not a construct of the system itself,” she said.

A gap in the underlying statute is complicating the effort, Springer said. Under the current law, agency certifications expire at the end of a calendar year. But because agencies usually complete their performance payouts for the year in January of the next year, they can’t file for certification until well into the year.

Springer also said the current statutory framework blocks senior scientific and technical employees from receiving Senior Executive Level II pay, which eliminates the incentive of higher compensation only because they haven’t chosen a management track, she said.

Voinovich voiced his support for bringing pay for performance to the government, but he urged Springer and OPM to move more aggressively to make the changeover happen smoothly.

“If this thing isn’t done correctly in the beginning, its chances of being successful, becoming part of the system — it isn’t going to happen,” he said.

Senior Executives Association offers a billThe Senior Executives Association would like to see Congress pass their suggested legislation, which would:

Provide that all Senior Executive Service employees who get a rating of fully successful or higher would get a mandatory market-based salary adjustment.

Include executive performance awards in salary calculations for retirement.

Change the time that Office of Personnel Management certification lasts from one or two years to five years. OPM would retain the right to revoke certification.

Ensure that agencies inform SES members of their final annual performance ratings within 60 days, enumerating the specific reasons for determination.

Allow SES members to work part-time for as long as five years after retirement but only for the purpose of making a smooth transition at the agency.

The bill would also establish a guaranteed pay raise for any General Schedule employee who moves into the SES, prohibit quotas and assure funding for SES pay.